Rogers-Shaw Merger Cost Savings May Lead to Job Cuts, Say Critics
While Rogers Communications Inc. (RCI) continuously pledged growth and investment in Western Canada during the CRTC’s hearings on its proposed $26 billion acquisition of Shaw Communications Inc. throughout this week, critics say the deal is bound to be accompanied by job cuts the company is banking on but not openly admitting to — reports The Star.
“You can’t have $1 billion in annual cost savings and not have any job cuts,” said Robin Shaban, public policy researcher and co-founder of economic consulting firm Vivic Research.
According to Shaban, companies usually cite employee downsizing as one of the top cost savings of a merger — or “synergies,” as Rogers calls the $1 billion it expects to save yearly within two years of the acquisition.
These job cuts, while obviously bad for workers at both companies, could actually end up being used to push the merger through regulatory approval even though it stands to hurt competition in the industry.
“We have a law that allows mergers that hurt” competitors if the merger leads to sufficient job losses,” said Shaban, referencing what’s known in Canadian competition law as the “efficiencies defence.”
Basically, the Rogers-Shaw deal could reduce competition and be bad for wireless, home internet, and/or TV customers, and still be approved by regulators if the two companies can demonstrate it will lead to substantial savings.
Shaban says RCI is almost certainly using job cuts as a bargaining chip in private talks with the Competition Bureau while explaining to the regulator how much money the combined company will save, including through the elimination of jobs.
The CRTC hearings that concluded Friday focused on the broadcasting side of the Rogers-Shaw merger, while issues like competition and the companies’ mobile wireless business will be reviewed by the Competition Bureau and Innovation, Science and Economic Development Canada. Neither body is expected to hold public hearings.
When asked if the Competition Bureau will assign any weightage to how the deal will affect labour, spokesperson Jayme Albert said the regulator’s objective is to determine how it will affect competition.
“While we understand that mergers can have an impact on employees, in determining whether a transaction will result in a substantial lessening or prevention of competition, we generally do not take into account any impact a transaction may have on jobs or employment.”
Unifor, which represents 26,000 telecom workers and 500 in the broadcast and film sectors, raised concerns over broadcast job losses during the CRTC’s hearings.
The union drew attention to Rogers’ plans to divert $13 million in annual local news funding Shaw provides to Global News toward expanding western coverage for its own CityNews channels, which the union says could result in 160 job losses based on rough napkin math.
Rogers says the merger will actually “create up to 3,000 net new jobs” in British Columbia, Alberta, Manitoba, and Saskatchewan.
On Thursday, Rogers spokesperson Andrew Garas said that about 60% of the 3,000 new positions will be in Alberta and most of the rest will be in B.C., adding that the “jobs will span a range of permanent roles.”
However, Garas did not say whether part of the promised $1 billion in “synergies” would come from job cuts — only that it would come from lower network costs and eliminating “duplicative technology associated with greater scale.”